The price elasticity of the US demand for imports in euros is given by:
A)the percentage change in the quantity demanded of imports by US consumers divided by the percentage change in the quantity demanded of US exports by European consumers
B)the percentage change in the quantity demanded of imports by US consumers divided by the percentage change in the price of the US imports in euros
C)the percentage change in the quantity demanded of US exports by European consumers divided by the percentage change in the quantity demanded of imports by US consumers
D)the percentage change in the price of European exports divided by the percentage change in the price of the US imports in euros.

Question

Quizplus · Accepted Answer

Price elasticity measures the responsiveness of the quantity demanded to changes in the price of the product. Therefore, the price elasticity of US demand for imports in euros should be calculated by dividing the percentage change in the quantity demanded of imports by US consumers by the percentage change in the price of US imports in euros, which is option B. Option A and C involve quantities of exports or demand for exports, which are not relevant to the calculation of the price elasticity of US demand for imports in euros. Option D involves the price elasticity of the demand for European exports, which is not relevant to the question.

The Price Elasticity of the US Demand for Imports in Euros